Lawyers Alliance fears super changes could hurt disabled

THE compensation payments of disabled people would be at risk of running out early under the superannuation changes announced by the Federal Government last week.

That's the fear of the Australian Lawyers Alliance, which claims the proposed 15% tax on superannuation earnings above $100,000 could hurt the very people the government is trying to help.

ALA national president Tony Kerin said he was concerned the proposed laws, designed to tax Australia's most wealthy in order to help pay for policies like the National Disability Insurance Scheme, would tax some of Australia's most disabled people.

"This is a matter of robbing Peter to pay Paul and it makes absolutely no sense," Mr Kerin said.

"From July 1, 2014, earnings above $100,000 pa on superannuation assets supporting income streams will be taxed at 15%. This will include catastrophically injured people, whose injuries mean that they will never work again, and who will now have to pay tax on their invested compensation money."

He said the "very seriously disabled", such as children with birth injuries and people with brain injuries, usually held their compensation money in allocated pensions.

He said this was then used to pay for their care and other costs.

"This new tax will mean they will likely have to go without some of their care and support or that their money will run out before their life expectancy," he said.

The changes, among a raft of reforms announced by the government, will only be implemented if Labor wins the September 14 election.

Opposition Leader Tony Abbott is opposed to the changes, but is yet to reveal how a Coalition government would deal with superannuation reform.